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Before You Trash Smart Beta

TedTed
in Fund Discussions
FYI: It’s probably no surprise that the S&P 500 high quality index has outperformed the S&P 500. But what is surprising, to me anyway is that the S&P 500 low quality index has also outperformed the S&P 500 (as well as the high quality index!). How is this possible? It has everything to do with the structure of the index; interesting things happen once you break the link between size and weighting. For example, Boston Scientific, the largest weighting in the low quality index, is just the 188th biggest stock in the S&P 500 index.
Regards,
Ted
http://theirrelevantinvestor.com/2016/03/30/before-you-trash-smart-beta/

Comments

  • wxman123
    Doesn't the example tend to support the view that smart beta out-performance (when it occurs) is due to company size and traditional risk factors rather than the "smart" element?
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